Speaker 1: Welcome to another edition of the Chicks on the Right
Speaker 1: podcast where we talk to our friend and sponsor of
Speaker 1: the show, Zach Abraham from Bulwart Capital Management. Zach, it's
Speaker 1: been a very busy week in the financial market world,
Speaker 1: and on Monday we saw stocks and the Dow and
Speaker 1: the NASDAC tank and then a bit of a recovery
Speaker 1: on Tuesday. What is your prediction for what's next and
Speaker 1: how should we be feeling about all this?
Speaker 2: And what are we calling it? We're calling it the
Speaker 2: Kamala crash, right.
Speaker 3: Yeah, yeah, So, first of all, we've been talking about
Speaker 3: so I kind of think you need to look at
Speaker 3: this from a couple of different angles, right, So, we
Speaker 3: were prepared for this. We had raised a lot of
Speaker 3: cash and even had some short positions, which for what
Speaker 3: that means is stuff that goes up when the market
Speaker 3: goes down. Nothing crazy, but the way markets work. And
Speaker 3: it's always funny to me because people always cheer market
Speaker 3: dysfunction when it's working in their favor and they forget
Speaker 3: about the flip side of it. Right. So, right, so
Speaker 3: we were looking at this record divergence unlike really anything
Speaker 3: we've ever seen in history between the popular tech names
Speaker 3: the NASDAC and virtually every other index. Right. So, and
Speaker 3: why that's a tell is because if you have and
Speaker 3: everybody's like, well, AI, and you're like, okay, but why
Speaker 3: is AI so popular? It's so popular because everybody believes
Speaker 3: it's going to transform the world and we're going to
Speaker 3: do things with robots instead of you know, people from
Speaker 3: now on. So if AI is what everybody is making
Speaker 3: it out to be, then the whole market should be rallying,
Speaker 3: not just that one group of stocks. Right. It's kind
Speaker 3: of this underlying thing that doesn't fit the narrative, right
Speaker 3: where you're like, wait a second, And those are kind
Speaker 3: of tells you look for where if something is so
Speaker 3: benefit for this that it's you know, you in that
Speaker 3: AI run up alone, those tech companies just off that bump,
Speaker 3: you know, you increase the value of the stock market
Speaker 3: by like three to four trillion dollars. Okay, So if
Speaker 3: that's possible, then that must mean that those companies are
Speaker 3: delivering that level of value to the overall economy. So
Speaker 3: why aren't other companies rallying with it? Right? So that's
Speaker 3: kind of a tell. And then you looked at how
Speaker 3: extreme that got, like everybody was virtually selling everything they
Speaker 3: owned and piling all of their money into Nvidia and
Speaker 3: these AI type stocks. Well, markets are like a boat,
Speaker 3: so when everybody gets on one side of the boat,
Speaker 3: it becomes unstable and pretty soon people are going to
Speaker 3: start running back to the other side. Right, So a
Speaker 3: it was something that we knew had to happen. You
Speaker 3: couldn't just keep loading up in this one sector without
Speaker 3: seeing things slashed back to the other boat. So that
Speaker 3: part of it, to me, is just mechanical. The other
Speaker 3: interesting part about that is that this market is still
Speaker 3: partying as if everybody's seeing stimulus checks and everything is
Speaker 3: growing great. Now. I think the people out there saying,
Speaker 3: oh my god, the economy is in free fall now,
Speaker 3: and that was the first salvo. That also isn't true.
Speaker 3: But you know, if you look at the economic numbers
Speaker 3: just on balance, they don't look bad. They're slowing, you
Speaker 3: see signs of economic weakness. But where I think the
Speaker 3: breakdown is is it's not that everything looks horrible and
Speaker 3: stock market's about the crater. But if we look at
Speaker 3: the underlying data of the market, we look at earnings trends,
Speaker 3: revenue trends, price, and reality have just gone in the
Speaker 3: opposite direction. Right, this market is still priced even now
Speaker 3: after the turbulence we've seen this week, it's still priced
Speaker 3: as if we're in the go go days coming right
Speaker 3: out of COVID, and we're not. It's just not at
Speaker 3: all cost. The living's gone way up. You're seeing employment
Speaker 3: fall down, job openings down deeply. You're seeing substantial wage
Speaker 3: decreases for construction jobs. Right. You're seeing all the signs
Speaker 3: of a slowdown. And it doesn't appear to me that
Speaker 3: investors really want to take those signs. So, you know,
Speaker 3: I think that there's and and that's always the case
Speaker 3: in markets. It's so funny. It's like politics in life. Right,
Speaker 3: everybody wants to pick out a silver bullet and go, oh,
Speaker 3: this is what that means, or this is what happened,
Speaker 3: And it's just never that simple.
Speaker 1: It's it's but are we in a recession or not
Speaker 1: at all?
Speaker 3: No? I mean so by any and all definitions. No, okay,
Speaker 3: but that doesn't mean like we were talking about, we
Speaker 3: also need to take into consideration that the numbers we're
Speaker 3: dealing with here. So you know, and we've said this before,
Speaker 3: but if you think back to eight oh nine, the
Speaker 3: Great Financial crisis, right, biggest financial issue that we've had
Speaker 3: in this country since the Great Depression. That whole nasty
Speaker 3: sequence carved three point eight per sent off of gross
Speaker 3: domestic product. The government is currently spending six and a
Speaker 3: half to seven percent of the size of the economy
Speaker 3: in deficit spending. So I think what you're going to
Speaker 3: continue to see is things that look very recessionary, right, Like,
Speaker 3: for instance, I think if you look at manufacturing, I
Speaker 3: think it's a really hard argument to make that manufacturing
Speaker 3: hasn't been in a recession for the last twelve to
Speaker 3: sixteen months. I mean, the numbers are recessionary. You look
Speaker 3: at other sections of the market, especially those that are
Speaker 3: more closely positioned to all the spending coming out of Washington,
Speaker 3: and they don't look recessionary, and so I think you're
Speaker 3: kind of in this in between area. That on the
Speaker 3: concerning side to me though, would be the turbulence. One
Speaker 3: of the most concerning signs I thought I saw this
Speaker 3: week personally was the incredible turbulence you saw on the
Speaker 3: price of the yen dollar swap, so the value of
Speaker 3: those two currencies, and then the nie k, the Japanese
Speaker 3: stock market being down twelve percent in a single session.
Speaker 3: That could be a byproduct of what was going on
Speaker 3: in our markets that imbalance. But we were just having
Speaker 3: our investment meeting and one of the things I closed
Speaker 3: the meeting with was, Hey, everybody, everybody in the general
Speaker 3: media is going, oh, you know, the panic of twenty
Speaker 3: twenty four is over. Get back in there and buy stocks.
Speaker 3: And I'm sitting there going, eh, you don't usually see
Speaker 3: major indexes like NIEK dropped twelve percent in a single
Speaker 3: day for no reason.
Speaker 2: So you would tell, would you? So you would tell
Speaker 2: somebody like if I were I just didn't look at
Speaker 2: anything yesterday when it came to stocks or anything like that.
Speaker 2: I just didn't look because I mean people like us
Speaker 2: were just like I just don't la la la, right, okay, right,
Speaker 2: So look because you think, okay, I'm just going to
Speaker 2: ride it out. Is that what you would tell somebody
Speaker 2: like us, Like you would just be like, okay, just
Speaker 2: don't worry about it. Just everything ride out. Nothing to
Speaker 2: see here, nothing to be concerned about. It's gonna be fine.
Speaker 2: Everything's gonna be fine. Is that?
Speaker 3: No? Not at all, Not at all. And I'm not
Speaker 3: saying this to be hyperbolic at all or even talking
Speaker 3: my own book. But what you saw just happen is
Speaker 3: something that we've been talking about for almost a year,
Speaker 3: which is everybody in their mother think back to the
Speaker 3: tech collapse in late nineties, think back to eight oh nine.
Speaker 3: Everybody was loaded up on banks because how could you
Speaker 3: go wrong? Okay, well what is that today? It's the
Speaker 3: big tech companies in the AI play right, Well, what
Speaker 3: you saw and the what the what lesson? And this
Speaker 3: is what we've been talking about now for six months
Speaker 3: in our in our inflation seminars that we're doing and
Speaker 3: all that saying, guys, you are historically overweight the most
Speaker 3: expensive stuck stuff stuff in the market, and you are
Speaker 3: historically underweight virtually everything else. At the very least, you
Speaker 3: need to balance out your portfolio because you are. And
Speaker 3: look here, I feel like the message that everybody needs
Speaker 3: to learn. Okay, Apple, it's safe, right, buy Apple. It
Speaker 3: can't go down. Did you see what Warren Buffett did
Speaker 3: over the weekend? He sold over half of it? Okay, well,
Speaker 3: you guys have heard me griping constantly about how Apple's
Speaker 3: price is a joke, their growth is stalled out, and
Speaker 3: that multiple on the stocks blown out. I just think
Speaker 3: people are ignoring a lot of normal warning signs. Yeah,
Speaker 3: everybody goes, why did Buffett sell Apple? Why do you
Speaker 3: think it's why he sells everything that gets too expensive?
Speaker 3: Like you're selling a company that has zero growth over
Speaker 3: the last eighteen months at thirty five times earnings. I'd
Speaker 3: be hitting that bid all day long. As a matter
Speaker 3: of fact, we sold out of the last of our
Speaker 3: Apple last Thursday for the same reasons, right, like the
Speaker 3: other thing, And this is the part of it where
Speaker 3: you know, you don't ever want to be dominated by
Speaker 3: greed or fear, But I think these investor changes in
Speaker 3: the way people are positioned should be sponsored both by
Speaker 3: fear and greed. Meaning not only has this stuff gotten
Speaker 3: to a point where it's really hard to justify the
Speaker 3: price based on you know, what's really going on underneath,
Speaker 3: But the flip side is is you look at a
Speaker 3: bunch of stuff on the other side of the market.
Speaker 3: It's just been completely ignored because everybody and their mother
Speaker 3: is levered up to their gills and this tech stuff, right,
Speaker 3: So I don't think it's just about avoiding disaster. Here's
Speaker 3: the other thing that nobody's really thinking about you're about
Speaker 3: seven percent away. If the market pulled back another seven
Speaker 3: to eight percent, you'd have a market that was flat
Speaker 3: over the last three years. Wow, right, nobody. You don't
Speaker 3: hear anybody saying that, right. There's still this attitude of oh,
Speaker 3: you can't lose in the market and get in there
Speaker 3: while the getting's hot and all that. And I'm sitting
Speaker 3: there going, eh, guys, you got to You got a
Speaker 3: market that's trending sideways. And what that usually tells you
Speaker 3: is you have too much exuberance priced into a market
Speaker 3: and the underlying reality isn't keeping up right. So that's
Speaker 3: that's the that's the issue you've got. And I think
Speaker 3: in an inflationary period of time, which we are most
Speaker 3: certainly dealing with, a portfolio that isn't growing is a problem. Now.
Speaker 3: What's one of the ways. There's a couple of ways
Speaker 3: to get to get around that. A have stocks that
Speaker 3: actually pay you to own them right by way of dividends.
Speaker 3: Right where think over the last three years. If I
Speaker 3: have a stock portfolio that's flat too, So let's say
Speaker 3: it hasn't outperformed the market, but it's paying me six
Speaker 3: percent dividends. Now I'm up twenty percent over the last
Speaker 3: three years on a compounded basis as opposed to being
Speaker 3: flat right, Well, how many people do you hear run
Speaker 3: around talking about dividends nowadays? Nobody? Right, They talk about
Speaker 3: how they just triple their money in Nvidia and all
Speaker 3: this kind of stuff. And it's just one of those
Speaker 3: anecdotal signs too of what should you be buying in
Speaker 3: the market. You should be buying the opposite of what
Speaker 3: all your buddies are talking about. And nobody's talking about
Speaker 3: their big dividend pair, you know what I mean.
Speaker 2: Everybody needs a Zach that's done right, and they need
Speaker 2: to They need to be paying attention to you on
Speaker 2: your radio show.
Speaker 1: They need to be going to your seminars. Tell people
Speaker 1: how they can find you and do those things.
Speaker 3: Yeah, pretty easy to find I me. You just google
Speaker 3: Know your Risk Radio or Bullwork Capital Management. We do
Speaker 3: our daily show twenty to thirty minutes updates of everything
Speaker 3: important that goes on in the markets, in the economy,
Speaker 3: and politics as it relates to finance, and then we
Speaker 3: do our weekly show. Got a great a great interview
Speaker 3: coming up this week with a PhD economist that worked
Speaker 3: at the Treasury, but also has run a hedge fund
Speaker 3: and got some really interesting insight into what's going on
Speaker 3: on a policy level and things like that. So it's
Speaker 3: gonna be a little wonky.
Speaker 2: But good stuff.
Speaker 1: All right. Well, thank you as always, You're always helpful.
Speaker 3: Thanks, all right, thank you, ladies. And by the way,
Speaker 3: my wife has really been loving your content. She's she's
Speaker 3: laughing out loud multiple times a day following your Twitter feeds,
Speaker 3: so love it.
Speaker 2: Glad to have her. Yeah, that's awesome.
Speaker 3: Yes.
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